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TMI Blog2013 (5) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... ef facts of the case are that the assessee is a subsidiary company of Uttar Pradesh Power Corporation Limited (UPPCL). The assessee company is engaged in the distribution of electricity, construction lines and providing services to the consumers. During the assessment proceedings, the A.O. noticed that the assessee claimed provision for bad and doubtful debts for amount of ₹ 14,43,84,206/-. The A.O. after considering the assessee s submission observed that provisions of Section 36(1)(vii) of the Income Tax Act, 1961 ( the Act hereinafter) has not been satisfied and it is only provision made in the books of account and hence not allowable. The A.O. made addition of ₹ 14,43,84,206/-. 5. The CIT(A) deleted the addition as under :- (Paragraph no.6, page nos.11 12) 6. As regard, Disallowance of Bad Doubtful Debts of ₹ 14,43,84,206/-, I have gone through the facts of the case, assessment order framed by the Assessing Officer and submissions of the appellant put forth during the course of hearing. The appellant has made provision for bad doubtful debts ₹ 14,43,84,206/- against revenue for sale of power @ 5% on incremental basis. This pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L account. The A.O. made addition as expenditures were not related to the year under consideration. The CIT(A) deleted the said addition as under :- (Paragraph no.7, page no.12) 7. As regard, the addition under the head prior period expenses of ₹ 1,20,59,311/- I have gone through the facts of the case, assessment order framed by the Assessing Officer and submissions of the appellant put forth during the course of hearing. The assessee were incurred the said expenses for employees cost administration during the course of incorporation of company and it should be allowed u/s 35D of the Income Tax Act, 1961. I have considered the facts and circumstances of the case and reliance on the order of assessing officer for A.Y. 2004-05 and the expenses claim by the assessee ₹ 1,20,59,311/- is hereby deleted. 9. We have heard the ld. Representatives of the parties and records perused. The A.O. disallowed expenditures on the ground that these are prior period expenses. However, the CIT(A) deleted the said addition accepting the assessee s contention that these expenses were allowable under section 35D of the Act and the assessee has claimed only 1/5th of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has deputed its employees to maintain records of the employees of the company and incurred such expenditure. The expenditures were pertaining to employees of the assessee company and not the employees of the separate trust. 13. We have heard the ld. Representatives of the parties and records perused. The admitted facts of the case are that the expenditures were incurred on account of salary and others pertaining to employees of the assessee company. The employees of the assessee company were working on deputation to maintain record of the employees gratuity, provident fund and other account of the trust. In order to constitute expenditure mentioned under section 37(1) of the Act, one of the important condition to be satisfied is that expenditure incurred should be wholly and exclusively for the purpose of assessee s business. As stated above that in the case under consideration the admitted facts are that the expenditures incurred pertained to the maintenance of record of employees gratuity and other benefits like PF etc. The employees of the assessee company has been deputed for discharging this duty after U.P. Government has crated the trust for the employees. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the department has not accepted the decision of the I.T.A.T. and appeal has been field before the Hon ble High Court. In the light of the fact, the A.O. made disallowance. 16. The CIT(A) deleted the said addition as under :- (Paragraph no.11, Page nos.13 14) 11. As regard, the addition under the head Depreciation of ₹ 69,55,61,698/-, I have gone through the facts of the case, assessment order framed by the Assessing Officer and submissions of the appellant put forth during the course of hearing. During the course of appellate proceedings counsel for the appellant submitted that the said disallowances of depreciation in the AY 2004-05 and 2005-06 has already been deleted by the CIT(A), Varanasi vide order dated 12.03.2007 and 19.03.2009. And also the said order has been confirmed by the Hon ble Income Tax Appellate Tribunal Allahabad for both the years vide order no.ITA No.237/(Alld.)/2007 dated 20.11.2008 and ITA No.99/(Alld.)/2009 dated 04.09.2009. I have considered the facts of the case and also gone through the relevant appellate order. In this case, the basis on which the disallowance has been made by the Assessing officer is not in existence a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) 12. As regard, the addition made under the head Repair Maintenance of ₹ 4,46,32,848/-, I have gone through the facts of the case, assessment order framed by the Assessing Officer and submissions of the appellant put forth during the course of hearing. The disallowance has been made by the assessing officer on ground of full justification of this is not available. I am unable to uphold these disallowances on this ground because prima-facie there is no provision in the act for disallowance on the ground of full justification of this is not available regarding genuineness. There is no finding by the Assessing Officer that expenditure was not incurred for the purpose of business. The Assessing officer has called for the various details which was produced before him. In absence of any exercise by the Assessing Officer in identifying such non genuine expenses and establishing the facts, the disallowance based on estimate can not be sustained. Apart from the facts that the case clearly gets hit by the decision in the case of M/s. Chandra Confectionery P. Ltd. reported in 2003(2) MTC 1022,wherein it has been held by the Hon ble ITAT Bench, Lucknow that such adhoc disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntatives of the parties and records perused. We find that while deleting the addition the CIT(A) has followed the order of I.T.A.T.. Lucknow Bench in the case of M/s. Chandra Confectionary Pvt. Ltd. (supra) and order of CIT(A) fop the A.Y. 2004-05, order dated 12.03.3007. In the light of the fact, we do not find any infirmity in the order of CIT(A). Order of CIT(A) is confirmed on the issue. 21.1 In the result, ITA No.228/A/2011 is partly allowed for statistical purpose. ITA No.229/A/2011 for A.Y. 2008-09 22. The first effective ground is in respect of disallowance of ₹ 22,51,93,495/- out of the interest expenditure. During the assessment proceedings, the A.O. noticed that the assessee has claimed interest expenditure of ₹ 58,38,11,563/- towards the financial institution Rural Electrification Corporation Limited, out of which an amount of ₹ 22,51,93,495/- has been shown as outstanding as on 31.03.2008. The A.O. invoked section 43B of the Act and made addition on the ground that the assessee has failed to furnish proof of payment made before furnishing of return of income. The CIT(A) deleted the addition as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o follow. Therefore, we rely on the judgement of Hon ble Rajasthan High Court. Similar view is taken by the Hon ble Gujarat High Court in the case of CIT vs. Shree Talal Taluka Sahkari Khand Udyog Mandi Limited, 178 CTR (Guj) 89. In the light of above discussion, if we consider the facts of the case under consideration, we notice that the CIT(A) has deleted the addition accepting the assessee s contention that interest payable was adjusted against amount from RE subsidy which was released by the U.P. Government. The U.P. Government has released the RE subsidy of ₹ 44,41,00,000/- and the said amount of interest ₹ 22,51,93,495/- were adjusted against RE subsidy. The Revenue did not dispute about the fact, therefore, in the light of above discussion and in the light of decisions cited above, we find that the CIT(A) has rightly deleted the addition. 25. The second ground is in respect of addition on account of disallowance out of various expenses ₹ 55,54,087/-, ₹ 4,77,24,356/- and ₹ 12,17,841/- out of miscellaneous expenses, repair and maintenance and printing and stationery. The ld. Representatives of the parties submitted that this issue is sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the appellant s company has debited a sum of ₹ 1,06,14,34,070/- under the head repair maintenance of plant machinery, Building, Line cables networks (installation, commissioning, and erection) and has deducted TDS on each payment. The assessee s company has deducted TDS on such payment ₹ 2,76,10,738.94 and deposited ₹ 2,63,91,191.40 and balance upto 31.03.2009 and balance amount of ₹ 12,19,547.54 has been deposited in the month of April 2009 which details as under :- S.No. Particulars Amount Date of deposited 1. Gorakhpur 131991.00 24.04.2009 2. Azamgarh 159318.00 40452.00 301053.54 500823.54 30.04.2009 06.04.2009 14.05.2009 3. Allahabad Zone 415225.00 04.04.2009 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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